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AT&T likely bit off more than it could chew

In the past few weeks, it's becoming increasingly clear that AT&T was facing an uphill battle with regards to its wishes to acquire T-Mobile for $39 billion. Today, finally AT&T realized that its efforts were likely futile considering that it was getting plenty of pushback from both the FCC and the Department of Justice.
 
The company announced in a statement that it is giving up its quest to purchase T-Mobile:
 
The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.

As witnessed by AT&T's statement above, the company is confident that the FCC and the DOJ have made a big mistake by blocking the merger and contends that customers will be the ones that will be hurt in the long run.

AT&T chairman and CEO Randall Stephenson [Source: International Business Times]

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “To meet the needs of our customers, we will continue to invest. However, adding capacity to meet these needs will require policymakers to do two things.
 
“First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC.  Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs."

As a result of the agreed upon "breakup" fee, AT&T will now have to pay $4 billion to T-Mobile parent company Deutsche Telekom AG.

This foreseeable outcome became even more clear this morning when The Wall Street Journal reported that AT&T was having difficulty in selling over 30 percent of the assets in the proposed $39 billion deal to Leap Wireless International Inc., Dish Network Corp., and MetroPCS Communications Inc.

Sources: The Wall Street Journal, AT&T





"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis



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